FTSE preview: Libya fears, inflation due

 

The FTSE 100 is seen falling back today as investors take stock after a three day bounce amid anxiety over military action in Libya and Japan's nuclear crisis.

Dealers monitor their screens on the trading floor of IG Index in London

Fears return: Traders will wait for economy data.

Financial bookmakers saw the blue-chip index opening 5 to 10 points lower after it ended 1.2% higher on Monday at 5,786.09.

The index is still 3.5% lower in March as worries about Japanese growth and rising oil prices have pushed investors away from riskier assets.

'The market was priced for nuclear Armageddon early last week; since then, as fears have eased it seems the obvious bargains have been snapped up and the market is now back to more rational levels,' Ben Potter, market strategist at IG Index in Melbourne, said.

'From here, it looks like investors are happy to wait on the sidelines for more positive news from Japan and the Middle East; it's been a pretty solid snap back rally from the lows.'

Investors will watch inflation data for more clues on the outlook on the UK economy and prospects for monetary tightening.

British inflation looks set to move further above the Bank of England's target and a surge in tax revenue may peter out, offering a gloomy backdrop to BoE policy minutes and the government's 2011 Budget on Wednesday.

CPI is forecast as rising 4.2% on the year to February, up from 4% the previous month, while RPI is also seen creeping higher. High inflation is seen putting pressure on the Bank of England to raise rates from a record low of 0.5%.

Government borrowing data for and CBI trends data for March will also be watched. US monthly home price data for January will also be watched later in the session.

The chief executive of Verizon Wireless - a joint venture of Verizon Communications and Vodafone -said he has no interest in buying Sprint Nextel Corp even as the company stands to lose its top position in the US wireless market because of a merger between AT&T and T-Mobile USA.

Iron ore supplies remain scarce as markets begin to realise the huge scale of reconstruction required in quake-hit Japan, but prices are dropping as demand shrinks on tightening moves by top consumer China, global miner Rio Tinto said.

Royal Dutch Shell's 100,000 barrel per day expansion of its Athabasca Oil Sands Project in northern Alberta will be fully ramped up in the second quarter, the head of the company's Canadian unit said on Monday.

British media groups vehemently opposed to News Corp's proposed buyout of pay-TV firm BSkyB say it is 'fanciful' that Rupert Murdoch will not interfere in the running of its influential news station.

The owners of Hapag-Lloyd AG have postponed a decision on floating the container shipping group, its majority owner said on Monday. TUI AG owns 50.2% of Hapag Lloyd and is expected by analysts to use the proceeds from any IPO of its shipping stake to buy back the shares it does not own in London-listed subsidiary TUI Travel, although it has never confirmed any such plans.

Barclays has sold its commercial property loans to specialist investors as part of a drive to shed underperforming businesses, the Daily Telegraph said.

Royal Bank of Scotland sees $80bn in debt maturing this year and in 2012 in the Gulf Arab region and Egypt, its top regional executive said on Tuesday.

Cairn Energy, Forth Ports and UTV report results today.